Risk Management Report: ABC Food Service

Introduction

A local small business risk management program aims to assist small business owners in identifying, assessing, and mitigating possible threats to business operations. The program may include several services, including training and educational resources on identifying and managing risks and access to industry experts who can offer advice regarding hazards. Access to risk management tools like risk assessments, risk management plans, and insurance choices may also be included. The program’s objective is to assist small business owners in understanding the risks they face and mitigating them to safeguard their businesses and assure their continued success. In addition, the program may provide tools and assistance to assist local small companies in navigating and recovering from unforeseen occurrences such as natural catastrophes, economic downturns, and pandemics.

Background

ABC Food Service is a family-owned and African American-owned business that has grown and changed significantly. In 2011, the company started as a part-time endeavor, running a food truck on Friday, Saturday, and Sunday. In 2016, however, the firm had grown to include Thursday operations and had surpassed 65 daily sales, forcing the decision to become a full-time endeavor.

In addition to extending its operating hours, ABC Food Service began targeting Norwich’s significant events and famous streets to improve its visibility and attract more consumers. They opened a year-round restaurant the same year they continued to operate the food truck from April to November. Each year, sales continued to climb.

In 2019, the business adapted to the problems provided by the COVID-19 pandemic by partnering with organizations such as Doordash and Grubhub to offer online ordering and delivery. In addition, the company rebranded with a new logo, increased its menu, and began delivering bespoke recipes for various settings through its comfort catering services, which catered 38 weddings.

In February 2022, the restaurant was forced to close due to an unfortunate fire. However, the company swiftly adjusted by acquiring a second food truck, and it now runs with two vehicles and catering services. Now, the company is searching for a new location to reopen the restaurant with more room and a larger kitchen.

In conclusion, ABC Food Service is a successful firm that has shown persistence and adaptation despite various obstacles. ABC Food Service has maintained its place in the food business through strategic expansion, rebranding efforts, and swift adaptation to changing conditions. The new site will allow them to service clients better and develop their business.

Potential Risks and problems

The restaurant faces several challenges that must be resolved to ensure its continued prosperity. The fact that the husband is the chef, and the wife is active in other economic operations is one of the primary issues. This has caused the owner to be responsible for everything other than cooking, which consumes a substantial amount of her time and energy.

To overcome this issue, the owner attempts to connect with another chef but needs more time to pursue the individual. So that the owner may concentrate on other elements of the business, one possibility would be to divide the employees. In addition, it may reduce the impact on the family business by streamlining the work process. Some guests wish to buy specialties but do not place their orders in time, or the restaurant needs more resources to provide a special menu. The owner has been brainstorming methods to innovate her business in response. Catering is one of the most lucrative services she provides, and she hopes to improve the chance for catering by gathering more information about this service. Catering is a seasonal company, and it would be advantageous to begin placing orders in February and March, as most events occur between June and October.

To enhance her earnings, the owner is also searching for ways to make more cash from the restaurant, such as through advertising strategies such as radio commercials played when clients drive in the morning. She is also considering ways to improve the payment methods, such as partnering with Square to accept credit cards, Apple Pay, and other means. The owner’s most significant challenges include the absence of a succession plan, the high cost of food and Square, and the seasonal business risks. The owner must design a training program for her employees and create a succession plan for the business to handle these challenges. In addition, she must discover measures to reduce the risks associated with a seasonal firm, such as enhancing efficiency and streamlining the work process.

In conclusion, The BBQ restaurant faces several obstacles that must be overcome to ensure its continued prosperity. These include corporate structure challenges, lack of time to handle special menus, inefficiency, lack of succession planning, and seasonal business risk management.

Nevertheless, by implementing measures such as dividing the personnel, optimizing the work process, a strategic advertising campaign, effective payment systems, training, and succession planning, the owner may overcome these obstacles and assure a lucrative future for her business.

Data Analysis

In mid-year 2021, an effort was made to gather, categorize, and analyze the financial data of expenses and earnings. The results of the analysis indicate that the total sales revenue during the time frame of January to mid-December 2021 displayed a normal distribution pattern, with the highest sales being recorded in August and September ($43,954 and $34,997, respectively). The data reveals that the total sales from June to September were 40 to 60 percent greater compared to the other surrounding months. This trend supports the assumption that the peak season for wedding catering falls between June and August. However, further evidence is required to confirm this hypothesis

Pursuant to our objectives, we took steps to gather the profit and loss (P&L) tables for the period of January to December 2021. We reached out to the owner and obtained the necessary data, which was then imported into an Excel spreadsheet for further analysis. Our intention was to develop a solution based on our conjecture and to corroborate this conjecture through the outcomes of our investigation.

To begin our analysis, we evaluated the costs associated with ABC Food Service’s wedding catering program and food truck. While our study, we came to the conclusion that the three most significant expenditures in 2021 were depreciation, wages, and taxes, which accounted for 17.5%, 16.1%, and 11.4% of the total expenses, respectively. It is worth mentioning that depreciation expenses are not reflected until December 2021, when they will total $11,140. These expenses, commonly referred to as “age and renovation expenses,” reflect the aging and renovation of the company’s property and may contribute significantly to financial losses and liabilities.

Unfortunately, our findings indicated that ABC Food Service overall revenue for the month of December 2021 is negative, amounting to $2,137. Taking all costs into account, their liabilities will total $19,802. From an objective viewpoint, this presents the organization with the potential for problems and risks.

However, our prior analysis suggested that they should focus on catering during the spring and summer months of the summer holidays, and the outcomes of our investigation support this recommendation. The months of June through October account for 70% of ABC Food Service total yearly travel and delivery expenses, which account for 2.02% of their total annual expenses. A similar method of analysis can be applied to the costs of the equipment, where the costs associated with the equipment accounted for 9.93% of the overall expenses, with the months of July through October being responsible for 77% of these costs.

As a result, we can confirm our earlier hypothesis that ABC Food Service wedding catering business will be the primary source of the company’s revenue in the second and third quarters and will also make a significant contribution to the company’s overall profits in these quarters.

Conclusion

The results of our investigation into ABC Food Service’s financial performance and expenditures in 2021 suggest that the company should focus on catering during the second and third quarters of the year. This is supported by the fact that the months of June to October account for 70% of the company’s total yearly travel and delivery expenses and 77% of the costs associated with equipment. By focusing on catering during these months, ABC Food Service can optimize its revenue generation and minimize its expenses.

Additionally, given the current post-pandemic environment, it is advisable for the company to focus on delivery and pre-seasoned food options. This would not only make things easier for customers, but it would also cut down on the costs of making and serving food on-site.

In conclusion, ABC Food Service Restaurant should prioritize catering during the second and third quarters and focus on delivery and pre-seasoned food options in the post-pandemic years. These steps will help the company optimize its financial performance and maximize its profits.